EU Taxonomy Changes the Game: Ukraine Transforms Public Investment System

In Ukraine, an event was held dedicated to integrating climate and environmental aspects into the public investment management system. During the discussion, leading experts and government officials discussed steps to reform public investments, implement the EU green taxonomy, and mechanisms to attract sustainable financing for Ukraine’s reconstruction.

Deputy Minister of Economy of Ukraine Andriy Telyupa, outlining the strategic prerequisites for implementing the EU taxonomy, emphasized the importance of this step for Ukraine’s European integration: “The implementation of the EU taxonomy has several important strategic prerequisites. First, Ukraine needs to harmonize Ukrainian and EU legislation on the path to European integration. If legislation is part of the EU green course, it must also be implemented.“

According to him, the taxonomy provides transparent and clear criteria for attracting green financing, which is especially important for Ukrainian businesses in conditions of limited resources. The Deputy Minister also noted that for the implementation of this initiative, Ukraine is actively cooperating with international partners, thanks to which it is already possible to attract hundreds of millions of dollars that will work for the Ukrainian economy.

An important part of the successful implementation of green taxonomy is the institutional capacity of the state to manage public investments. Deputy Minister of Development of Communities and Territories Maryna Denysiuk spoke about this. She informed that the Cabinet of Ministers of Ukraine created a comprehensive management system, including a strategic investment council and an intergovernmental coordination group led by key ministries.

“We are making efforts to make the process as inclusive, open, and understandable as possible for everyone, and we are trying to develop clear evaluation criteria,” emphasized Denysiuk, adding: “There is a long way ahead to explain all new procedures to stakeholders and make them as effective as possible for major reconstruction.”

The international community is closely monitoring reforms in Ukraine and is ready to provide assistance. Tessa Claire Cullen, a governance specialist at the World Bank’s Global Institutions Department, highly appreciated the pace of reforming the public investment system in Ukraine, especially given the difficult conditions of war. She particularly emphasized the importance of considering climate aspects in investment projects.

“Ensuring that public investment projects are resilient to climate change impacts is not only cost-effective for the Government of Ukraine, but it also helps you align with your EU goals,” said the World Bank representative. She also spoke about the SURGE program, which provides financial support to Ukraine for integrating climate considerations into the public investment management system.

The practical implementation of the reform has already begun, as reported by Viktor Nestulia, head of the project office of the DREAM public investment online platform. According to him, in February of this year, the government approved three resolutions that determine the procedure for forming a medium-term plan of priority public investments and other important procedures. The key change is the transition from a reactive approach to strategic planning.

“We are moving towards projects not appearing because some donor came and said that we can finance this right now. We must proceed from the strategic priorities of the state, the strategic priorities of each ministry, sector, each region, and each community,” emphasized Nestulia, adding that new approaches include mandatory analysis of environmental impact, climate risks, and other aspects of sustainable development.

To understand the prospects of the European green taxonomy, it is important to familiarize yourself with the EU experience. Andrey Gurin, head of the DG FISMA group of the European Commission, shared impressive figures: in 2023, financing and investments aligned with the taxonomy reached 250 billion euros in the EU, which is 30% more compared to the previous year. At the same time, he drew attention to the challenges faced by financial institutions, especially regarding the collection and processing of sustainability data.

Gurin also emphasized the importance of adapting requirements for small and medium-sized enterprises and emphasized that sustainable financing has global significance and is not limited by EU borders. In his opinion, to achieve climate neutrality, efforts of the whole world are necessary, and the EU taxonomy can become an important tool for this.

The banking sector of Ukraine is actively preparing for the new realities of sustainable financing. Andriy Grys, head of the environmental and social risks department at Ukrgasbank and chairman of the ESG subcommittee of the Independent Association of Banks of Ukraine, spoke about this. According to him, since last year, there has been increased attention from banks to the implementation of ESG principles and sustainable financing in their activities.

“Banks cannot be aside from the regulatory framework of the European Union, as well as future national regulation, including the implementation of taxonomy on sustainable activities,” noted Grys. The main challenge, in his opinion, is the lack of qualified experts familiar with the specifics of sustainable financing.

Yaroslav Teleshun, a senior eco-policy expert at WWF Ukraine, and Andriy Kitura, head of the Green Transition Office and director of development at DiXi Group, also participated in the discussion. They spoke about the “Do No Significant Harm” principle as an important element of the EU taxonomy and about the integration of climate and environmental criteria in the reform of public investments.

Andriy Andrusevych, an expert on green recovery from UNDP in Ukraine, highlighted aspects of using the EU taxonomy for sustainable recovery of Ukraine. He emphasized that green taxonomy can become an important tool not only for reconstructing damaged objects but also for creating conditions for socio-economic development and transition to a green economy.

An important contribution to the organization and conduct of the event was made by Olena Pavlenko and Roman Nitsovych from DiXi Group, who coordinated the discussion and emphasized key points of the discussion.

The participants of the event concluded that the integration of environmental and climate criteria into the public investment management system opens the way to truly sustainable recovery of Ukraine. EU taxonomy becomes not just a requirement for European integration, but also a practical tool for attracting financing and ensuring long-term sustainable development of the country in the face of global climate challenges.